Moody's rates Solectron converts B1

Moody's Investors Service said it assigned a B1 rating to Solectron Corp.'s new $450 million convertible senior notes due 2034 and affirmed the company's existing ratings.

While net proceeds from this offering will be made available to refinance existing unsubordinated debt, it is expected that the company will devote the funds to partially refinance the May 2004 noteholders' put associated with the existing 3.25% LYONs due 2020.

Moody's said this financing, together with the company's existing cash, provides ample capital to meet the company's sole debt maturity obligation through 2005, while also affording Solectron greater flexibility for maximizing potential sales proceeds from the asset divestiture program.

The existing ratings affirmation was based upon Solectron's ability to stem any further operating performance weakening and its concerted efforts to address material near-term debt maturity pressures. While the rating outlook remains stable at this time, Moody's said this is predicated upon the company reporting more material near-term improvement to operational margins, ongoing profitability and positive cash flow generation.

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